Stock market may stay volatile till Diwali, says Sunil Subramaniam. Here's why
Subramaniam said there would be days when certain aspects would come a bit below expectations and one would expect the market to reflect that.
- Aug 23, 2023,
- Updated Aug 23, 2023 12:14 PM IST
Sunil Subramaniam MD and CEO Sundaram AMC says the stock market is likely to stay volatile a least till Diwali, before resuming the uptrend. In an interview to Business Today TV, Subramaniam said economic data for India looks strong but the direction of domestic market also depends upon foreign flows and other key factors.
"Closer to Diwali, I expect the market to start rallying again. Markets are always discounting the future. The recent rally was led by the discounting of good economic future backed up by a lot of data. But one must remember that a medium term forecast that looks good doesn't mean that every day in that medium term is going to be good," Subramaniam told Business Today TV.
Subramaniam said there would be days when certain sectors or certain aspects would come a bit below expectations and one would expect the market to reflect that.
From a domestic perspective, Subramaniam said the unevenness of the monsoon could be one such case. Till a few months ago, there were expectations India would have an above average monsoon. "But as we are seeing the monsoon has been a bit below the long period average. The places where the rains are happening are not necessarily the places that you want them to. A part of that is reflected in pulses and vegetable prices," he said.
That, Subramaniam said, leaves a bit of uncertainty in terms of inflation and the RBI monetary policy. Subramaniam said the RBI rate cuts, which looked likely by year-end a few months ago, may now not happen that quickly. In the short-term, there would be a bit of breath-taking in the market, Subramaniam concluded.
Subramaniam said investors tend to look at economic data such as GST collection and corporate tax collections and, on that front, everything looks hunky dory. But they lose sight of the fact that markets are largely at the margin, driven by foreign flows that are multiple times the domestic flows, Subramaniam said.
"India getting money is not a function of India alone, but a function of India relative to other potential investment markets to FIIs. India got a lot of FII money recently because of TINA factor. There were not many alternatives. You have to closely track the flow of international flows. US continuing on a rate hike could mean a strengthening dollar and that, to an extent, mean it would become expensive for a hedge fund to borrow money and invest in emerging markets," Subramaniam said.
The US Fed recently suggested that it may not stop rate hikes, which may lead to FIIs taking a pause.
"The economic view is good in India but the money that FIIs will invest based on news a bit volatile," Subramaniam said.
Also read: Hot stocks on August 23, 2023: Adani Power, YES Bank, Vodafone Idea, TVS Supply Chain and more
Sunil Subramaniam MD and CEO Sundaram AMC says the stock market is likely to stay volatile a least till Diwali, before resuming the uptrend. In an interview to Business Today TV, Subramaniam said economic data for India looks strong but the direction of domestic market also depends upon foreign flows and other key factors.
"Closer to Diwali, I expect the market to start rallying again. Markets are always discounting the future. The recent rally was led by the discounting of good economic future backed up by a lot of data. But one must remember that a medium term forecast that looks good doesn't mean that every day in that medium term is going to be good," Subramaniam told Business Today TV.
Subramaniam said there would be days when certain sectors or certain aspects would come a bit below expectations and one would expect the market to reflect that.
From a domestic perspective, Subramaniam said the unevenness of the monsoon could be one such case. Till a few months ago, there were expectations India would have an above average monsoon. "But as we are seeing the monsoon has been a bit below the long period average. The places where the rains are happening are not necessarily the places that you want them to. A part of that is reflected in pulses and vegetable prices," he said.
That, Subramaniam said, leaves a bit of uncertainty in terms of inflation and the RBI monetary policy. Subramaniam said the RBI rate cuts, which looked likely by year-end a few months ago, may now not happen that quickly. In the short-term, there would be a bit of breath-taking in the market, Subramaniam concluded.
Subramaniam said investors tend to look at economic data such as GST collection and corporate tax collections and, on that front, everything looks hunky dory. But they lose sight of the fact that markets are largely at the margin, driven by foreign flows that are multiple times the domestic flows, Subramaniam said.
"India getting money is not a function of India alone, but a function of India relative to other potential investment markets to FIIs. India got a lot of FII money recently because of TINA factor. There were not many alternatives. You have to closely track the flow of international flows. US continuing on a rate hike could mean a strengthening dollar and that, to an extent, mean it would become expensive for a hedge fund to borrow money and invest in emerging markets," Subramaniam said.
The US Fed recently suggested that it may not stop rate hikes, which may lead to FIIs taking a pause.
"The economic view is good in India but the money that FIIs will invest based on news a bit volatile," Subramaniam said.
Also read: Hot stocks on August 23, 2023: Adani Power, YES Bank, Vodafone Idea, TVS Supply Chain and more